GCC PE supply disruption limited, outlook stable-to-soft

19 July 2017 08:36 Source:ICIS News

Focus article by Veena Pathare

SINGAPORE (ICIS)--The impact of a recent disruption in the supply of polyethylene (PE) in the Gulf Cooperation Council (GCC) remains limited as the near-term outlook continues to stay stable-to-soft amid a seasonal lull.

An unexpected outage at regional producer EQUATE’s following technical issues would have limited impact on the market in August, market sources said.

Importers based in the GCC continued to hold expectations of a rollover or reduction in prices when August offers emerge later this month, in view of the on-going summer holidays.

With several market players traveling outside of the region, demand for food packaging was seasonally soft, market sources said.

Moreover, activities in key downstream markets such as construction was slow owing to high daytime temperatures typically seen in July and August, capping demand, market sources said.

“We found it difficult to sell volumes in July because of slow demand and expect this trend to be seen in August as well,” a regional importer said.

Suppliers in the region had previously assumed a stable-to-firm outlook, propped by stronger demand ahead of the Eid ul-Adha holiday in September.

The absence of Qatar-origin cargoes following the diplomatic rift and the disruption at EQUATE’s unit in the previous week additionally upheld a stable-to-firm outlook, especially for low density PE (LDPE) grades because of limited supply within the region, supplier sources said.

The outlook for other PE grades was also largely supported by a lack of inflow from Qatar, supplier sources said.

Other market sources however, deemed little or no impact of the recent supply trends on PE prices and said that need-based buying among regional importers deemed any possible uptrend as unlikely.

Sufficiently stocked inventories coupled with hand-to-mouth buying largely capped July off take and this situation would spill over into August as well, buyer sources said.

“Given the recent trend in Asia and also because of weak demand, buyers want to buy only need-based quantities. Processors in the region also hold sufficient stocks,” a regional PE converter said.

The absence of Qatar-origin high density PE (HDPE) and linear low density PE (LLDPE) cargoes also saw limited impact on regional prices as supply from other regional producers was sufficient, buyer sources said.

On 14 July, ICIS assessed LDPE film prices in the GCC at $1,250-1,330/tonne CFR (cost & freight) GCC, down $10-20/tonne from the previous week.

HDPE were assessed at $1,120-1,180/tonne CFR GCC, stable from the week before, while those of LLDPE film fell $10/tonne at the low end to $1,140-1,180/tonne CFR GCC, ICIS data showed.

By Veena Pathare